Naked Put

AAA

DEFINITION of 'Naked Put'

A put option whose writer does not have a short position in the stock on which he or she has written the put. Sometimes referred to as an "uncovered put."

INVESTOPEDIA EXPLAINS 'Naked Put'

Naked puts are very risky since the writer can lose big if the underlying asset moves opposite to the desired direction. But, profits are huge if the underlying asset moves in the right direction.

RELATED TERMS
  1. Call

    1. The period of time between the opening and closing of some ...
  2. Naked Call

    An options strategy in which an investor writes (sells) call ...
  3. Naked Option

    A trading position where the seller of an option contract does ...
  4. Naked Position

    A securities position that is not hedged from market risk. Both ...
  5. Naked Shorting

    The illegal practice of short selling shares that have not been ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
Related Articles
  1. Put writing is an essential part of options strategies.
    Options & Futures

    Introduction To Put Writing

  2. Options & Futures

    Naked Options Expose You To Risk

  3. Options & Futures

    Naked Call Writing: A Risky Options ...

  4. Options & Futures

    Options Basics Tutorial

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center